Highlights

  • S&P Global Mobility light-vehicle sales and production forecast update to be released April 16
  • US sales downgraded 700,000 units in 2025 (vs March 2025 forecast)
  • North American production forecast to fall 1.28 million units in 2025
  • Persistent, high tariffs next phase of normal

On April 9, 2025, US President Donald Trump put a 90-day pause on reciprocal tariffs that he had previously announced on April 2. Trump maintained the universal 10% tariff which went into effect on April 3.

The reciprocal country-specific tariffs are meant to address non-tariff barriers as well as matching direct tariffs; the 90-day pause will enable these countries to have more negotiations with the US.

On April 14, the president told reporters he is considering some exemptions on auto and auto parts tariffs, but at the time we’re writing this, there is no visibility into details. That potential is not factored into our analysis.

Auto tariffs started on April 3

Despite the flurry of changes, there has been no change to the US 25% tariff announced by the US on March 26, which applies to all light-vehicle imports, regardless of country. The 25% tariff includes auto parts as well as completely built up (CBU) vehicles. The CBU autos tariff went into effect on April 3, 2025, while the auto parts portion is due to come into effect on May 3, 2025.

S&P Global Mobility adjusts vehicle sales and production forecasts

While the situation remains dynamic, S&P Global Mobility has set its assumptions used for the April 2025 light-vehicle sales and production forecasts and the May 2025 medium and heavy-duty commercial vehicle production forecast.

Looking beyond the 25% autos tariff imposed on April 3, we expect that the tariff on auto parts will be imposed on May 3, 2025. However, the March 26 proclamation leaves some ambiguity relative to auto parts imports from Canada and Mexico. The intent is that, as with vehicle import tariffs, parts compliant with the USMCA trade agreement will be tariffed less any value from US-sourced materials or components.

The US Commerce Department is developing a process to adequately process this element. As a result, the auto parts tariff may not apply to Canada or Mexico until that happens. In our assumptions for the April 2025 forecast, however, we expect this issue will be resolved early in the second half of 2025 and that the 25% auto parts tariff will move forward.

In building our April 2025 forecast round, we looked past the current turmoil surrounding tariff levels. Central to the automotive industry forecast development is that we expect the light-vehicle 25% tariffs will continue through 2025 for Canada and Mexico. Non-USMCA compliant vehicles will see the 25% applied to the full value of the vehicle. For USMCA-compliant vehicles, which of course can only come from Canada or Mexico, the 25% tariff will be applied to the value of the vehicle less any US-sourced content.

Looking further out, we also expect to see that the tariff rate for vehicles and parts from Canada and Mexico will drop to 12% in 2026. For vehicles and parts from outside of North America, we expect the autos and auto parts tariff will remain in place through 2025 and 2026, though also foresee these being reduced to about 15% by 2027.

While we do expect retaliatory tariffs from other countries, we have seen negotiations hold off new tariffs from the European Union. China announced an 84% tariff on goods from the US; the US has responded with an additional 125% tariff on goods from China, beginning April 10, 2025. However, a full view into what and when the retaliatory tariffs will be remains uncertain. The April 2025 forecast does not reflect specific impact of potential retaliatory tariffs.

AutoTechInsight

One of the top forecast changes in S&P Global Mobility forecast history

The impact of Trump’s auto tariffs, in combination with the 10% universal tariff, has led to one of the largest single-month changes we’ve ever made to the forecast. Only changes reactive to the 2020 Covid global manufacturing pause and the 2008-09 global financial crisis were larger than the changes to the sales and production forecasts for April 2025.

We will continue to adjust our assumptions as conditions change. Today, we are sharing the preliminary, top-line changes to the global light-vehicle sales forecast, the North American light-vehicle production forecast and the North American MHCV forecast.

How new auto tariffs will impact US vehicle sales

Our preliminary take for the April 2025 global light vehicle sales outlook is a sharp decline from our March 2025 forecast of 1.3 million units, with reductions of 2.5 million for 2026 and 2.0 million for 2027. Global sales in 2027 are forecasted at 92 million units.

The impact is expected to be largest in 2026, in part because these tariffs began to be imposed after a reasonably strong first quarter of 2025. With one quarter of sales and production already under the belt for this year, the impact will be lower than what we see for most regions in 2026.

As noted, we do presume that the US 25% auto and autos parts tariffs on Canada and Mexico will drop to 12% in 2026, though the rest of the world is not expected to see relief for another year.

For our April 2025 forecast, we see US sales downgraded by about 700,000 units in 2025, 1.2 million units in 2026 and 930,000 units in 2027, compared with our expectations set in the March 2025 forecast round.

Impact on South Korea and Japan will be lower volumes, with Japanese market sales seeing a total reduction in US sales of 119,000 units across 2025, 2026 and 2027. South Korea is expected to see US sales over those three years down 52,000 units versus the March 2025 forecast round.

For mainland China, we have taken out 1.1 million units of US sales volume in this period. Europe’s outlook has been cut by 223,000 units over these three years.

Impact of tariffs on vehicle sales

How auto tariffs will impact vehicle production

In terms of production, we are ready to share our preliminary guidance for North American light vehicle production. North American production is forecast to decline by about 1.28 million units, to a range of 13.9 million to 14.3 million in 2025. In 2026, we are now expecting production in the range of 14.2 million to 14.6 million (A decrease of 4.5% to 7.0%) and for 2027 in the range of 14.9 million to 15.3 million (decrease of 1.0% to 3.5%).

Impact of tariffs on medium and heavy-duty commercial vehicle sales

The next round for the medium and heavy-duty commercial vehicle (MHCV) forecast will be in May 2025, though the MHCV team has also provided a preliminary look at the impact.

For the MHCV market, tariff impacts are expected to push US freight recovery further into the future, transforming 2025 into another down year for the North American MHCV market.

Elsewhere, recent changes are projected to flatten the trend. Our early draft adjustments to 2025-26 expectations will see global MHCV sales at approximately 4% per annum below our prior forecast and North America alone about 11% lower. North American production is likely to be cut more deeply still.

Auto tariffs will lead to higher auto prices

Based on the activity in the past three months and the trajectory of the latest actions across the globe, the impact of the tariffs has potential to have a massive near-term impact on global sales and production, with the US and North America feeling the worst of the impact.

The US, Canada and Mexico have built an interdependent trade and manufacturing ecosystem over the past thirty years. Trump’s auto tariffs are providing a shock to the system and are expected to result in higher manufacturing costs and higher vehicle prices in all three countries. 

S&P Global Mobility offers clients unique insights to navigate tariffs and more, allowing you to see opportunities others don’t. With 100+ years of automotive industry expertise, we offer tailored, ongoing advisory services designed to help you navigate tariffs and win. 

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This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.

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